The U.S. Supreme Court plans to hear oral argument on Jan. 21, 2015, in the disparate-impact case, Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. The fundamental legal issue in the case is whether disparate-impact claims are cognizable under the Fair Housing Act. As far as the facts of the case go, the dispute involves a statutory challenge to the allocation of low-income housing tax credits. The TDHCA distributes the tax credits associated with the Low-Income Housing Tax Credit Program throughout Texas. The ICP is a 501(c)(3) nonprofit that works to place low-income, mostly African-American Section 8 tenants in Dallas’s more affluent and largely white suburban neighborhoods. The ICP brought suit against TDHCA back in ...

The most recent work plan issued by the CFPB's Office of Inspector General indicates the results of a handful of audits are expected to be completed sometime during the fourth quarter, indicating that either they will be released within the next few months or held over until sometime after the start of 2015. One such review has to do with a joint evaluation of coordination between the CFPB and other regulatory agencies. The inspectors general of the Federal Reserve, the Federal Deposit Insurance Corp., the National Credit Union Administration, and the Department of the Treasury are conducting “an evaluation of the coordination between the CFPB and other regulatory agencies with respect to conducting supervisory activities,” said the OIG’s work plan. ...

Due-diligence and document-file reviews will key Fitch’s rating of residential MBS backed by re-performing loans and seasoned mortgage loan collateral, based on revised criteria, according to a recent report from Fitch Ratings. Fitch recently finalized its criteria for analyzing re-performing and seasoned loan RMBS to include closer attention to risk factors. Fitch uses its mortgage loan-loss model as well as representation-and-warranty and due-diligence reviews in analyzing the key risk drivers for RPLs. However, since the methodologies currently used by the rating agency were developed with an eye towards newly originated and seasoned performing collateral, RPL pools and some seasoned performing pools purchased in the secondary market are likely to be influenced...

The FHA’s accounting of receivables from settled legal claims and partial claim notes is so sloppy that the exact amount collected might be difficult to gauge, according to an internal audit of the agency’s FY 2014 and 2013 financial statements. Conducted by the Department of Housing and Urban Development’s Inspector General, the audit concluded that the FHA had booked receivables from seven cash settlements totaling $1.2 billion in FY 2014 but collected only $466.4 million of those settlements. In addition, during fiscal 2014, as part of its loss mitigation efforts to bring delinquent loans current, the FHA paid $4.4 billion to lenders for partial claims but never received the required promissory notes from the lenders for $1.5 billion of the claim payments. FHA rules require lenders to provide the agency with promissory notes for the payments made or ...

Reports that the Senate Appropriations Committee might include a proposed FHA administrative fee in the Senate’s spending bill for financial and housing agencies is causing a furor within the mortgage financing industry. Industry groups have come out in force, urging the leaders of the Senate committee to remove the provision from a continuing resolution to fund the government beyond Dec. 11. There is speculation that the House might go along with the fee. The provision, expected to raise $30 million for FHA quality assurance efforts, would allow the Department of Housing and Urban Development to charge a fee of no more than 4 basis points of the original principal balance of all FHA-insured mortgages a lender made in the previous fiscal year. HUD originally made the request in President Obama’s proposed FY 2015 budget. Over industry objections, the Senate later incorporated the ...

The FHA has announced loan limits in 2015 for high- and low-cost areas, virtually unchanged from the loan limits in effect through the end of the year. The new limits will take effect on Jan. 1, 2015. The maximum loan limits in high-cost housing areas will remain the same as the 2014 level of $625,500. The current standard loan limit in lower-cost areas will also remain unchanged at $271,050. The mortgage loan limits for Home Equity Conversion Mortgage loans will continue to have a maximum claim amount of ...

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...

A provision on lender-placed insurance in the servicing segment of the FHA’s draft Single Family Housing Policy Handbook appears to contradict the agency’s previously stated position on LPI, according to the American Bankers Association. The ABA urged the FHA to retain the current policy regarding a lender’s discretion in requiring hazard and flood insurance for loans the agency insures. In a comment letter, the ABA expressed concern about the FHA’s new proposed standard for LPI, which could limit the amount of LPI coverage a lender or servicer could impose on a borrower to the outstanding balance of the loan. It would apply broadly to hazard insurance, including flood insurance. There are several problems with this approach, the ABA said. The group noted that Congress had established a standard which requires any home construction in a special flood hazard area (SFHA) to obtain “at least” ...

Final PMIERS Rule Expected in 1Q15. The Federal Housing Finance Agency has revised its timeline for publishing a final version of the Private Mortgage Insurance Eligibility Requirements, which Fannie Mae and Freddie Mac proposed in July at the direction of the FHFA. The PMIERS will establish capital and other requirements for private mortgage insurers. In a statement, industry trade group U.S. Mortgage Insurers said it has received word from the agency that the final PMIERS would not be published until at least late in the first quarter of 2015. The FHFA initially indicated that a final rule would be issued by yearend 2014. The USMI reiterated its support for an updated PMIERS. Mortgage Executives Concerned About G-Fee Increase. A survey of mortgage executives at this year’s Mortgage Bankers Association annual conference found 53 percent saying that ...

This week, the U.S. Supreme Court heard oral arguments in two consolidated cases on whether the overtime provisions in the Fair Labor Standards Act apply to mortgage loan officers – and the narrower question of whether federal agencies have the authority to make regulatory changes without using the “notice and comment” rulemaking process. Both cases involve the Mortgage Bankers Association as the respondent. The U.S. Department of Labor argued...